SBI Adjusts Deposit Rates Post RBI's Policy Rate Reduction

In a move that aligns with the Reserve Bank of India's (RBI) recent 25 basis-point cut in the benchmark rate, the State Bank of India (SBI), the nation's premier lender, has announced a reduction in its deposit rates by 10 basis points across select tenors. This adjustment is anticipated to influence the Marginal Cost of Funds based Lending Rate (MCLR) in the forthcoming months, potentially lowering borrowing costs for businesses.

Impact on Loans: The bank has also decreased its External Benchmark Linked Lending Rate (EBLR), tied to the repo rate, by 25 basis points, mirroring the RBI's repo rate cut. This reduction is expected to benefit borrowers with home and personal loans by reducing their interest rates.

What This Means for Depositors

Effective from April 15, the revised deposit rates affect two key tenors: '1 year to less than 2 years' and '2 years to less than 3 years'. Both general and senior citizen rates in these categories have seen a 10 basis-point decrease. Notably, the special 444-day deposit scheme, Amrit Vrishti, now offers a reduced interest rate of 7.05%, down from 7.25%.

Broader Implications for the Banking Sector

SBI's decision is likely to set a precedent for other public sector banks, following similar actions by private lenders like HDFC Bank, which recently adjusted its savings account rates. This development signals a shift towards broader monetary transmission, facilitated by increased liquidity in the banking system.